Key Witness Casts Doubt On Casey

December 12, 1986|By Los Angeles Times

WASHINGTON — A New York businessman, Roy Furmark, told the Senate Intelligence Committee in closed session Thursday that he personally informed CIA Director William Casey in early October that some money had been diverted to the Nicaraguan rebels, according to committee sources.

The witness also testified that a Canadian investment group put up millions of dollars to fund the U.S. arms sales to Iran.

Furmark once was a legal client of Casey's, sources said. He also is a business associate of Saudi billionaire Adnan Khashoggi, who has been identified by U.S. and Israeli sources as a broker in the Iran arms deal.

Casey has insisted that he did not know about the diversion of arms profits to the contras until Attorney General Edwin Meese told him about it in November. But Casey acknowledged Thursday, for the first time publicly, that he was at least vaguely aware of the operation more than a month earlier than Meese's disclosure.

At the time Meese made the contras diversion public on Nov. 25, the attorney general insisted that Casey had been unaware of any connection between the Iranian arms sale and the contras.

The CIA director acknowledged Thursday that he had learned about the contra connection in an Oct. 7 telephone call from Furmark, a New York energy consultant.

Word of Casey's disclosure only served to heighten congressional pressure on President Reagan to oust the 73-year-old CIA director.

House Intelligence Committee Chairman Lee Hamilton, D-Ind., whose committee questioned Casey in secret the same day, said he was shocked not only by what Casey knew but also by what he did not know.

''When a New York businessman, Furmark, can call up Director Casey and tell him what the NSC is doing and what arms merchants are doing and what the administration is doing that he doesn't know about, it shows that the process has gone amok,'' Hamilton said.

Even though some senators found it hard to believe, those who heard Furmark's testimony said it added significantly to their understanding of how the Iran-contra operation was funded. ''With each witness that comes before this committee,'' marveled Sen. William Cohen, R-Maine, ''the picture becomes clearer, the story more confounding.''

Neither the witness nor members of the committee would publicly identify the Canadian investors who put up money for the deal. In fact, Furmark was so fearful of publicity that he eluded reporters by running from the Senate committee hearing room to a waiting taxi.

According to sources, the Canadians were needed to finance the deal because the Pentagon refused to release weapons from U.S. arsenals without receiving $12.2 million, the total value of the goods, and the Iranians refused to pay in advance. Sources said the Canadians apparently were drawn into the deal by Manucher Ghorbanifar, an Iranian who acted as a go-between.

The Canadians were the only up-front investors in the deal, as far as Senate investigators know. Sources said the Canadian government had no role.

Congressional sources said Furmark, who also apparently had no direct role in the deal, first got involved when he took it upon himself to telephone Casey on Oct. 7 to report that the Canadian investors had been repaid only $10 million of their investment, though they were expecting $20 million.

Although Furmark told Casey he thought that the money had been diverted to fund the Nicaraguan rebels, Casey has indicated on a number of occasions that he knew nothing about the contra connection until he learned about it from Meese.

In talking to reporters Thursday, the CIA director said that he did not actually ''learn'' about the diversion of funds to the contras until he talked to Meese, but that he had ''questions'' about it after his conversation with Furmark. He reportedly told members of the House Foreign Affairs Committee on Wednesday that he began raising questions about it with Reagan's national security adviser, John Poindexter, after his call from Furmark.

Meese would not comment on the apparent conflict between Casey's testimony and Meese's statement that the CIA director did not know of the transfer of Iranian arms funds to the contras until Meese learned of it.

Ironically, even after hearing testimony from Furmark, congressional investigators said they still had no evidence to prove that the money was diverted to the contras.

''Somebody obviously made some money and somebody lost some money,'' said Cohen after hearing Furmark's testimony. ''We have not at this point in time received any sufficient evidence as to what if anything happened to the funds.''

Bernard McMahon, staff director of the Senate Intelligence Committee, said that after nearly two weeks of hearings the panel is still unable to determine what happened to the $10 million to $30 million that Meese reported had been diverted to the contras. McMahon said the committee has been trying without success to develop a flow chart on the money.